The global insolation map has three notable patches: one in western Australia, another in south-west US and the last stretching across North Africa all the way to Saudi Arabia. It is in these regions where the most sun hits the ground, creating the greatest potential for solar energy. The large swatch in the MENA region is of particular interest these days. It runs through countries that are fast-growing and in need of additional sources of energy and new exports. And the virtually untapped solar energy is not far from Europe, a continent that has a huge demand for alternative energy and a relative lack of sunshine. Both in Oman and around the globe, governments and industry have recognised the opportunity and are pushing to turn unexploited solar resources in the MENA deserts into real energy that can be transported regionally and northward. The story being pitched is sensible, believable and quite compelling. The Sahara Desert gets about 3500 hours of sunshine a year, as much or more than the best areas for solar energy in the US. In theory, just 0.3% of North Africa’s desert could supply all the electricity needs of both MENA and the EU; six hours of sun hitting the world’s deserts could power the entire world for an entire year. Importantly, the land in question is for the most part uninhabited, making the argument just that much more compelling. Clean energy could be created without disrupting lives or crops. 100% RENEWABLE: The context is important. The EU has set an ambitious goal of supplying all its energy from renewable sources by 2050, by which time it is also hoping to reduce its carbon emissions by at least 80%. To help it achieve those targets, connections to the desert assets of North Africa are being considered and actively pursued. The Desertec Foundation, an organisation working to develop solar power in North Africa that can be transmitted to the EU grid, believes that 15% of Europe’s energy needs can be supplied by desert-based installations by 2050. The EU governments accept the need to cross the Mediterranean, and official policy is being written to support international trading. The EU’s Renewable Energy Directive calls for 20% renewable energy by 2020 and permits member states to import energy from non-EU countries to meet their respective quotas. Fukushima is also helping to drive Europe toward a desert solution. After the nuclear accident in Japan, Germany decided to phase out nuclear power by 2022. This policy has made finding renewable energy sources a priority, as Germany gets 23% of its electricity from nuclear plants. As a result, the country has been a leader in the promotion and development of North Africa desert-based solar installations.
MENA’S Potential
The situation in the MENA region is conducive to the building of solar capacity in the desert. In the 20th century it was the fastest-growing part of the world: the population of MENA in 2000 was 3.7 times what it was just 50 years earlier, data from the World Bank show. While the fertility rate has fallen (from 6.9 births per woman in 1960 to 2.7 in 2010), it has been more than balanced by an increase in longevity (with average life expectancy at birth rising from 46.4 years in 1960 to 72.4 in 2010). This has left a number of countries with some serious challenges, including overcrowding, a high rate of youth unemployment and a lack of resources. At the same time as their population are growing, the oil riches that once supported a number of regional economies are beginning to run out.
Ensuring Supply
According to the World Bank, MENA as a whole became a net importer of energy in 2011. In 2010 net exports of energy were equal to 148% of energy use. The following year, the region’s net imports of energy were equal to 87% of its use. Inflation, which has been a problem for years in a number of countries in the region, will now feed through more directly to the more vulnerable economies and could stir discontent. A priority is to ensure future energy supplies. Even the oil-rich nations know that there will come a time when the commodity will run out, and alternative energy is one way to guarantee access to power when that day comes, and could even become a future source of export revenues.
Since the 2010 Arab Spring, the trend toward renewables has only strengthened. Before the uprisings, about 10 separate nuclear programmes were in the works in Arab states. They were being pursued in part to address demographic pressures, in particular to power largescale desalination plants to ensure access to safe and clean water. After the uprisings, most new nuclear projects in the region came to a halt. The lack of strong governments and in some cases the rise of representative government made it difficult to pursue potentially controversial programmes. Investors also backed off, seeing the new governments as untested. Importantly, priorities have changed. There is a growing sense in the region that countries need to develop in a more balanced way that brings prosperity to the greatest numbers. Support for alternative energy development, regional cooperation and the export of electricity has increased as a result of this.
Massive Projects
Across MENA, solar infrastructure is being established in the desert. Morocco, a country highly dependent on imported oil, has embarked on a $9bn plan to build five alternative energy power stations by 2020. Algeria, an OPEC country highly dependent on oil revenues, has said it will spend $60bn to develop alternative energy capabilities, and is aiming for 650 MW of renewable power by 2015 and 22 GW by 2030 – 12 GW for domestic use and 10 GW for export. Tunisia plans to start building the massive 2-GW TuNur solar project in 2014, with the aim of generating electricity there by 2016, while Libya announced a $3bn solar programme in 2010. Egypt’s 150-MW Kuraymat solar power plant has been operational since June 2011. Countries in the Gulf region are gearing up too. In Saudi Arabia, officials from the King Abdullah City for Atomic and Renewable Energy have called for building 41 GW of solar capacity over the next 20 years. In early 2012 Dubai launched the Mohammed bin Rashid Al Maktoum Solar Park, a long-term project set to increase solar energy production over time, working up to 1 GW by 2030. In Abu Dhabi, Masdar Power, a developer and operator of renewable power projects, has announced that the $700m, 100-MW Shams 1 project will be complete by the end of 2012, and there are plans for a second 100-MW plant.
Regional Grid
These projects will be brought together via a regional grid that is expected to extend across North Africa through to the Middle East and across the Mediterranean to Europe. The plan is to have an interconnected and unified network that is set to allow electricity to be transported within and between Europe and the MENA region. There are already connections between Morocco and Spain, Morocco and Algeria, Algeria and Tunisia, Libya and Egypt, and Tunisia and Libya. Many of the links have been around for years – Morocco and Spain were connected in 1997. In fact, even now all of North Africa is on a grid that is connected to the EU.
Official efforts have been behind the realisation of the grid. The idea of the Mediterranean Electric Ring has been on the EU agenda since 2001. The concept has since been modified to include other and more advanced links and received additional support from a number of companies and associations. MedGrid, a Paris-based industrial consortium, was founded in 2010 to promote to building of the Mediterranean grid. Its members include French firm Alstom and Germany’s Siemens. Shareholders in the Desertec Industrial Initiative have included European giants such as Deutsche Bank, Siemens and UniCredit, while 3M, HSBC, IBM, Audi and BASF are among its associate members. In 2011 an Memorandum of Understanding was signed by MedGrid and Desertec to work together in making the desert solar vision a reality.
Challenges
But like many grand projects, the MENA-EU alternative power grid has its share of challenges. While solar technology has been around for years and is becoming increasingly efficient, it is still very expensive. In a study done by the US Energy Information Administration, solar power facilities cost about four times more per KWh to produce than a conventional oil-gas combined-cycle plant. Despite tremendous improvements, solar panels still do not produce that much power. Photovoltaic cells convert sunlight into energy at about 10-20% efficiency and generate electricity costing about $0. 18-0.30 per KWh. The theoretical maximum efficiency of current technology is 31%.
The very nature of solar energy makes it problematic. Unlike conventional power sources, the output cannot be adjusted to demand, so the utility has to have oil or gas generators ready should production fall too low. Excess energy also needs to be stored. Batteries are inefficient, expensive and usually toxic. Other solutions might be clean, but they are expensive, hard to adjust and often unworkable in certain environments, such as hydro storage in the desert. Clean energy is often not all that clean as the batteries usually contain lead, and the cells themselves can contain arsenic, cadmium, hexafluoroethane, lead and polyvinyl fluoride, many of which can find their way into the environment during manufacturing and disposal. Solar panels could be the world’s next great toxic waste problem.
CSP
Most of the projects in North Africa utilise concentrated solar power (CSP) technology. These systems do not use photovoltaic cells, but employ arrays of mirrors to concentrate the sun’s rays and heat a transfer fluid that is used to power a turbine. The advantage is that the transfer fluid can be stored and used to produce electricity at night. CSP technology has also been historically cheaper than photovoltaic cells per KWh produced. But CSP has some downsides. While it has been around for decades, the technology has never been used on a much larger scale and there are questions about its effectiveness, cost, optimisation and system design. Critics wonder whether CSP systems can really store energy efficiently and whether it will be possible to maintain so many mirrors in a desert climate at a reasonable cost, especially if water is needed for cleaning.
Grids & Lines
The greatest challenge for the joint MENA-EU solar vision is transmission. While a grid does exist in North Africa, it is rudimentary and not at all appropriate for the task. The Morocco-Algeria-Tunisia connection is relatively good and has a solid connection with Spain and the EU. But the Tunisia-Libya section of the grid was as of June 2012 not operational. And while Libya and Egypt are technically connected, the link is highly limited. A 2005 attempt to synchronise the grids failed and the transmission capacity is currently a third of what it should be. Going in the other direction towards Europe, there is no interconnection between Syria and Turkey and limited transmission options between Syria and Egypt via Jordan.
Bottleneck
Crossing the Mediterranean is also proving to be a bit of a challenge. While high-voltage direct current is a relatively straightforward, robust and mature technology, the distances and depths involved are such that most routes across are either too expensive or beyond current cable technology. The Mediterranean has a complex morphology and turns out to be a bit of bottleneck in the plan. One EU report suggests simply focusing on the classic straights of Gibraltar crossing, which is shorter and not very deep. But that would mean upgrading most of the power grids and interconnections in North Africa, a difficult task.
Other smaller barriers could stand in the way as well. The countries in question are at varying degrees of development. Legal infrastructure between countries is not harmonised. Political instability persists, and sabotage is not out of the question. Between nations, some borders are ill-defined and lawless, raising doubts about the potential for cooperation. Corruption is still an issue in some places and could stand in the way of the proper development of the electricity network. For alternative energy to work, conservation and relevant planning are necessary. As it stands now, buildings are constructed and infrastructure is developed without much concern for efficiency. The truth is renewables cannot entirely replace conventional energy sources unless societies adjust consumption. That requires greater use of efficient lighting technologies, construction of green and intelligent buildings, higher investment in efficient cooling systems, and the use of low-power equipment in the IT sector.
Falling Subsidies
The challenges in the West are somewhat different, with economic difficulties leading to a significant drop in subsidies, tax credits and preferential tariff rates for solar. In the current economic climate, the developed world simply cannot afford to support the industry like it once did. This raises a lot of questions about the future of the technology. Incentives are needed, it is often said, so the industry can achieve the critical mass to make it competitive with conventional power generation. The decline in official support also further clouds the future of MENA solar farms. While there is a lot of policy inertia, the grand project is going to take considerable state funds, and that money may simply not be there. In the autumn of 2012 it seemed that the challenges were beginning threaten the vision of a desert solar solution for Europe. Siemens and Bosch both pulled out of the Desertec Initiative, while Spain was reconsidering its support for three Moroccan solar plants. Plenty of stakeholders are still in the game, and Desertec and many of its related projects are still in the works, but second thoughts by corporations and governments might slow the implementation of the overall plan or require adjustments of it.
But other parts of the developing world may experience surprising growth in solar generation capacity regardless of what happens in the West. While no region can match the solar resources of North Africa in terms of the sheer size of the productive area, a number of countries outside the EU, the US and MENA are particularly well-placed for the utilisation of solar technologies. It is a different story from that in MENA. It is not one of massive solar farms feeding wealthy countries; it is more one of smaller projects being developed for local demand. For that reason, it may in the end be the story. Plans and projects in South-east and South Asia and South America are not dependent on international coordination and politics, the economies of the West and the transmission of power over distances virtually unprecedented. Demand is at home, and in some cases manufacturing will be there too.
Declining Costs
The growth of solar started relatively late in much of the developing world and has come in fits and starts, but it is very possible that activity will pick up and that the ambitious targets will be met. Just as countries are beginning to focus more on promoting renewables, the photovoltaic market has crashed as a result of manufacturing overcapacity in China. The price per watt for photovoltaic modules fell from about $2.75 in 2009 to about $1.00 at the beginning of 2012, and recent spot price reports put average module prices at around $0.62 per watt. Prices are so cheap now that people are starting to talk about grid parity – the point at which a given alternative energy is as cost-effective as energy from conventional sources – especially in places where electricity costs are high.
There are uncertainties, however. The overcapacity may be temporary; the world’s largest solar panel maker, China-based Suntech, has been pushed to the brink of bankruptcy, while more than 20 solar manufacturers in the US and EU and 50 small Chinese manufacturers have folded. The glut may indeed pass, and a cost-reflective price for solar cells may again assert itself. Local factors may also stand in the way of rapid growth in the industry. Integrating solar into the grid is a complex matter that may not be fully appreciated by all the countries involved. It requires more than just buying panels and plugging them in. Even in places where solar is ideal, technical issues can hinder development. Complications regarding power purchase agreements in Chile, for example, are limiting progress there. Solar companies fear being stuck with an obligation they cannot meet with solar and having to make up the difference by running expensive generators.
A Bright Future
While the development of solar faces many challenges, one fact remains: the sun is and will be for the foreseeable future the best source of safe and sustainable energy. However, politics, corruption, technology, costs and perceptions may slow the expansion of the solar power industry, and not all the vast fields of panels and mirrors planned and envisioned between now and 2020 will become a reality. Nevertheless, progress will occur and capacity will be built, especially as fossil fuels begin to dwindle. Demand for electricity will rise, the price of conventional fuels will increase and the cost of panels will continue to drop, and in the not too distant future the whole question of whether solar is worth it will fade into the background.
In the meantime, development will be patchy, but overall positive. Some areas will pursue the technology simply because they have enough sunshine already to make it worth their while. Others will spend money on solar as an extension of industrial policy, developing the industry as much for the exports it creates as the power it generates. Still others will make the commitment for environmental or geopolitical reasons. Together, all the various efforts will add up to something significant, investable and material. Solar may not happen exactly as the dreamers, politicians and consultants hope it will, but it will happen and be meaningful in terms of dollars spent, fuel saved, technologies created, and houses and industries powered.
Oman’s Model
In the sultanate, feasibility studies have examined the potential of all of the main alternatives, but it is the solar option that has emerged as the frontrunner. The case for solar energy production in Oman was firmly established in 2008 by a report conducted by the Authority for Electricity Regulation. Using data gathered over a five-year period, it showed that the sultanate enjoys one of the highest solar energy density levels in the world, and also posited what amounts to a transformative idea with regard to the nation’s future energy production: “The total solar energy resources in Oman are huge and can theoretically cover all energy demands, and could provide for export as well.” The report also demonstrated which parts of Oman might be best suited to the development of solar power infrastructure. Yearly variation, according to its findings, averaged at about 4 KWh per sq metre per day for January to about 6.5 KWh in May, when solar insolation in Oman is at its highest. In general, the greatest potential was found to be in the internal desert areas of Marmul and Fahud, although some coastal areas such as Seeb displayed promising amounts of insolation year-round. Salalah, with its summer rain season from July to September showed a lower insolation level, as did Sur, which the report suggested was due to the region’s frequent fogs.
A Growing Sector
A small number of companies in Oman have been active in the solar sector for a number of years. Three of the longest established are Growth International, Oman Solar Systems and OMASY, which between them pursue opportunities in the import, wholesale and retail sales and manufacturing of solar equipment. To date, solar energy has primarily been used for water heating purposes in households and in the provision of power for remotely located equipment. However, recent developments suggest solar power may play a larger role in the nation’s industrial projects, particularly in the extraction of oil and gas.
Keeping It Clean
In 2011 Petroleum Development Oman contracted US-based GlassPoint to build a solar powered system for thermal oil recovery. The solar installation is the first of its kind in the region and sidesteps the problems of dirt, dust, sand and humidity, which significantly reduce the efficiency of solar rays and have threatened to block the development of the solar industry in the region. The installation will be encased inside a glasshouse structure, preventing the accretion of dust and grime on the panels as well as protect the moving parts of the system from airborne particles.
The wider industrial sector, meanwhile, is benefitting from an initiative undertaken by the Public Establishment for Industrial Estates (PEIE), which has formulated a four-stage programme that aims to establish solar energy as a viable power option for industrial projects at the locations it operates across Oman. Stage one, begun in 2010 and completed in 2012, included conceptualisation, planning and trials for proof of concept. After a comparative analysis of technologies, concentrated photovoltaic was chosen as the most suitable, and the PEIE has embarked on the second and third stages of its strategy, founded on three key objectives: establishing a research and development centre; setting up an assembly plant for components and building its solar power plants. Current plans call for the construction of a 500-KW and 10-MW plant at the Samayil Industrial Estate. Stage four, which will be undertaken between 2014 and 2020, will see the construction of more financially viable solar power plants in other industrial estates, and the expansion of research and development and manufacturing facilities.
The Private Sector
If the ambition of establishing Oman as a solar energy centre is to be realised, private sector investment will have to complement the current government-led approach. Already, there are signs that independent players are willing to invest in the nation’s fledgling solar sector.
In May 2012 South Korean firm Kwan Won Engineering installed a 1-KW Desert Photovoltaic Test Bed System at Sultan Qaboos University, the first stage of a larger scheme in which it will invest in 50-MW power plants in Duqm Industrial City. Meanwhile, Swiss global wealth management company Terra Nex Financial Engineering announced in 2012 collaboration with the Middle East Best Select fund to develop a $2bn project that will establish a solar power value chain in the sultanate. Terra Nex works on identifying and developing investment opportunities in the Middle East. According to its current plans, a series of solar power stations, a solar panel factory, an aluminium frame production factory will be established in a number of locations across the country as well as an education institute dedicated to renewable energy. Large-scale initiatives such as this suggest Oman’s solar sector will continue the trajectory of growth it has established in recent years.
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